Shameful' treatment of subcontractors prompts Government action

October 12, 2012

Reaction to the results of an industry survey that has damned the“shameful” practices from some of the larger contractors towards their subcontractors, could well end up benefiting smaller construction contractors and tradesmen.

The survey was carried out by StreetwiseSubbie, the industry network of experts who provide conflict resolution and advice services to contractors. It found that 85 per cent of workers who have served as subcontractors on public sector jobs have had to wait longer than the statutory days for their payments to come through. One sixth of the respondents to the survey said that they had had to wait two to three times the statutory 30 days.

The founder of StreetwiseSubbie, Barry Ashmore, said that 96 per cent of Specialist Contracting firms said they feel they are being treated unfairly.

“I’ve spent 42 years in this industry and the last two years are the worst I’ve ever experienced,” said Ashmore, stating that the survey would catch the eyes of public sector chiefs and industry standards organisations. “We’ve trained a generation of young people in the industry to think beating up subcontractors is the way business should be done. It’s shameful.”

The Daily Telegraph newspaper spoke to a number of subcontractors over the their experiences with prime contractors on public sector projects. The financial director of an engineering subcontractor in the North West of England said that delays in payments were jeopardising trade and competition.

“There’s a total imbalance of power,” he said. “I had a company try to get additional goods out of us we hadn’t quoted for, saying they’d charge us damages if we didn’t. They just say, ‘if you’re going to be awkward, we just won’t pay’.”

Commenting on the report, a Cabinet Office spokesman explained that they have introduced a mystery shopper service to help with prompt payment for subcontractors, but stopped short of abolishing bespoke contracts, with longer payment terms, as a number of subcontractors suggested.

“To help us monitor this we have introduced the mystery shopper service,” he explained. “We investigate referrals where prompt payment isn’t happening, working with our Crown commercial representatives and departments to resolve the issues, and we name and shame contractors where the case is clear cut. We also tackle these issues outside central government.”

“We encourage suppliers to help us stamp out bad procurement practice in the supply chain of government contracts by using the mystery shopper service.”